Wells Fargo Steps Back From Mortgage Business: What's Going On?

Wells Fargo & Co WFC shares are inching higher in Tuesday's after-hours session after the company announced strategic plans to create a more focused home lending business.

What To Know: Well Fargo said it's exiting its correspondent business and plans to reduce the size of its servicing portfolio to reduce risk in its mortgage business. The company's new plans focus on serving bank customers, as well as individuals and families in minority communities. 

"We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus. As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership," said Kleber Santos, CEO of Wells Fargo's consumer lending business.

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In addition to the company's narrowed focus on mortgages, Wells Fargo also plans to optimize its retail team to focus primarily on bank customers and underserved communities, invest $100 million to advance racial equity in homeownership and deploy additional home mortgage consultants in minority communities.

Wells Fargo also plans to broaden its existing $150 million investment from its special purpose credit program to include purchase loans. The investment is expected to help reduce costs for individuals in underserved communities looking to refinance or buy a home.

Wells Fargo said its new approach provides flexibility to more quickly address customer needs.

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Wells Fargo is set to report its fourth-quarter results on Jan. 13. The bank is expected to turn in fourth-quarter earnings of 64 cents per share on quarterly revenue of $19.98 billion, according to Benzinga Pro.

WFC Price Action: Wells Fargo has a 52-week high of $60.30 and a 52-week low of $36.54.

Wells Fargo shares are up 0.24% in after hours at $42.45 at the time of writing. 

Photo: courtesy of Wells Fargo.